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View Diary: Shocker: Huge Companies Cost U.S. Billions Exploiting Tax Break Designed For Farmers Swapping Horses (86 comments)

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  •  If you die, you never receive the capital gain (1+ / 0-)
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    Ian Reifowitz

    so it's not such a big win. At that point, it is covered by estate taxes.

    (Interestingly enough, when the estate tax went away in 2010, it wasn't so awesome for these kinds of holdings, because without the estate tax, you keep the original basis in the property and deal with capital gains, IIRC.)

    It was my understanding that the like kind required similar use for the different property. Googling, I see there is some difference of opinion on that.

    Fry, don't be a hero! It's not covered by our health plan!

    by elfling on Mon Jan 07, 2013 at 09:19:17 AM PST

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    •  Similar use (3+ / 0-)
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      Ian Reifowitz, lostinamerica, JerryNA

      is not part of the test for a like-kind exchange.  It is not a "difference of opinion;" it is a well-accepted principle.

      It is, in fact, a tremendous benefit to be able to defer taxation until death, at which point your heirs get a stepped-up basis.  It is irrelevant that the exchangor, while alive, doesn't recognize the capital gain, as that is the whole point of seeking deferral. The exchangor gets the income from the appreciated property and can otherwise take advantage of tax-free appreciation--for example, the exchangor can mortgage the property exchanged into, which allows him to get the benefit without the taxes.

      "Well, I'm sure I'd feel much worse if I weren't under such heavy sedation..."--David St. Hubbins

      by Old Left Good Left on Mon Jan 07, 2013 at 10:40:34 AM PST

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